Wednesday, April 27, 2011

In Review: Bernanke's First Press Conference

Appearing somewhat nervous, Ben Bernanke held the first ever press conference by a Federal Reserve chairman.

In his opening remarks, Bernanke correctly admitted that inflation on a long-term basis is strictly a monetary phenomenon. We should be able to hang him with this quote, down the road, when price inflation is much higher. How is he going to blame other factors at that point?

Remarkably, drawing viewership lower than attendance at Atlas Shrugged, Part 1, the counter of viewers accompanying the Fed video stream indicated that viewership declined as Bernanke droned on. The counter peaked at approximately 16,000 and was down by thousands as the press conference went on.

With plenty of wiggle room, Bernanke indicated that there is unlikely to be a QE3. However, as I have noted, the aggressive-passive Bernanke has plenty of new tools to do whatever the hell he chooses, regardless of what he says, or implies. Most significantly, if he stopped adding reserves to the system today, he has that overhang of excess reserves (over a trillion dollars) that he can coax into the system. Watch the reserve numbers and the money supply, as President Obama has said in another context, the press conference is about nothing more than a carnival barker in action, a boring barker at that.

Other small notes, Bernanke did indicate that when the Fed uses the term "extended period" that it is a somewhat nebulous term, but that it generally refers to a couple of FOMC meetings out.

He also said that inflation expectations are not high, which means he is either lying or hasn't looked at the price of gold and silver lately.


  1. "Appearing somewhat nervous," you say. I must note here that I have never, on any occasion, seen Bernanke appear to be anything other than nervous at his many public appearances, but he seems more and more so. I am starting to get the feeling that he knows exactly how full of crap he is, or at least that he's growing less confident that he really knows what the heck he's doing and maybe is having greater and greater doubts about the efficacy of his policies.

    Perhaps he feels the noose of history tightening around his neck, and comes closer daily to the realization that if the things he's doing don't work as he had thought--and by now he has to be at least getting a clue that maybe they won't, even if he doesn't understand why--that his name will be popping up in future histories along with words like "incompetent," "worst," "failure," "Second Great Depression," etc., etc. That could make anyone nervous.

  2. "He also said that inflation expectations are not high, which means he is either lying or hasn't looked at the price of gold and silver lately."

    Really? Those are his only two options? Looking at the TIPS spread like a normal economist isn't one of them?